Two big news this week detonated the textile market.
On the 18th, President Xi Jinping had a phone call with US President Trump at request. ignited market hopes.
Geopolitics is fermenting again, oil tankers are attacked and drones are shot down, which directly pulls crude oil prices back from the bottom. As of the close of the 20th, the New York Mercantile Exchange in July The price of light crude oil futures for delivery rose $2.89 to close at $56.65 a barrel, an increase of 5.38%. Geopolitical tensions have stirred up the nerves of the market. Coupled with the low inventory of polyester products due to the previous wave of shipments, prices have risen strongly.
At the end of June, we still face the constraints of the 300 billion trade war!
On June 18, the news of the phone call between the heads of state of China and the United States rekindled hope in the market, and the new round of tariffs that had been hanging on the textile and apparel market fell. The possibility of decline is the most direct benefit for the textile and apparel market in the first half of the year. Although the results have not yet been announced, the impact of the US tariff increase on textile foreign trade companies is real, especially those companies that have direct trade relations with the United States.
After the tariffs were imposed last year, the vast majority of companies were able to better transfer the tariff costs through price negotiations with buyers. Coupled with the depreciation of the RMB exchange rate, the overall impact was not significant. However, the negative impact on enterprises of increasing the tariff rate to 25% this year is generally greater than the 10% tariff imposed in 2018. Mr. Jiang, the head of a textile company in Wujiang, said that if tariffs are increased, it will have a direct impact on orders, because tariffs in Vietnam, India and other countries are already low, and some U.S. orders will be transferred to India and Vietnam, and Chinese orders will be lost. . In the early stage, according to predictions by market stakeholders, export orders to the United States may fall by 30%-40% year-on-year on products covering a range of US$300 billion that may be subject to further tariffs.
In addition, during the interview and survey, most sample companies said that although the company does not directly export to customers in the United States, the escalation of Sino-US friction will have a certain impact on the entire gray fabric market. The decrease in terminal demand will lead to a corresponding decrease in market orders, which are interrelated and will also affect the overall ordering atmosphere on the trade side. A late-night phone call this week made people in textile foreign trade breathe a sigh of relief. However, in response to Trump’s duplicity, they still face the constraints of the 300 billion trade war issue at the end of June. Therefore, everyone is still relatively rational about this foreign trade “black swan” of.
“When the phone rings, there is a thousand taels of gold!” It is not too early to say whether the current market style will change. At present, the market is still fermented by the impact of emergencies, and the PTA, polyester filament and gray fabric markets are all showing signs of oversold rebound to varying degrees:
1. Low-price selling has converged, and the decline in gray cloth prices has been suspended;
We will always discuss this in the early stage The market is weak this year. In addition to the impact of poor demand, the production capacity of conventional products has surged. The imbalance between market supply and demand is the key. Many textile bosses have built factories outside the country in the past two years. The homogenization of the market and fierce competition have also reduced the previous environmentally friendly production capacity. The dividends from the clearing are exhausted. It is said that there are many manufacturers in northern Jiangsu that have not received orders after the Qingming Festival and have about 2 months of inventory. The market began to sell goods at low prices in late May. Although it has not developed on a large scale, it has been To a certain extent, this has suppressed the price of gray fabrics in the local market and made it more difficult for manufacturers to operate.
Mr. Tian from Wujiang Yonghua Textile Co., Ltd. said: “Most of the gray fabrics in northern Jiangsu are shipped to Shengze and Keqiao, and then sold in local stores. In the early stage, polyester taffeta, There are cases of pongee being sold at low prices, but I haven’t heard of this phenomenon this week.” Driven by the atmosphere of rising raw materials, manufacturers that originally shipped goods at low prices began to stop selling, preparing to wait for opportunities. It is said that the current inventory cloth purchase prices are also increasing by a few cents.
2. Confidence is gradually regained, which will help speed up the pace of placing orders;
For market participants, there has always been a saying that “confidence is more important than gold.” This year’s market is actually not as pessimistic as everyone imagined, but many people in the industry chain have lost confidence in the market and are afraid to take action easily. As a result, bottom-up procurement from terminal clothing to finished products to gray fabrics to raw materials is more cautious and generally not A large amount of goods were stocked to bet on the market conditions, but this phenomenon is now improving. Bosses of sample companies generally said that the trade market will improve in July.
Mr. Chen from Huiye Textile Co., Ltd. said: “In previous years, June was the worst, and July got better. It should be the same this year.” Nantong JiechuangMr. Wu from Weaving Co., Ltd. said that in the near future, the market in July will be better than in June, but the possibility of sudden large orders is relatively small. Mr. Tian from Yonghua Textile also believes that the demand in the terminal clothing market will directly affect the next order reception, but the market cannot continue to be bad, and the market in July will be better than now.
The restoration of the confidence of textile bosses will boost the market atmosphere to a certain extent. Although the effect is not obvious yet, based on the expectations for the July market, there will be trade Businessmen began to purchase and place orders for conventional chemical fiber gray fabrics.
“Inventory” becomes Damocles The Sword of Sri Lanka restricts the direction of the market!
“The main thing is to look at the inventory. Only when the inventory drops to a certain level will the market start to really pick up.” During the research process, a polyester taffeta producer said: Mr. Chen, the owner’s textile boss, said, “At present, the inventory in the factory is still relatively high. There is already one month’s inventory. This is a quantity that has never been reached in the past two years. Therefore, while ensuring normal operation, we will Consider destocking first, rather than maintaining profits. Now the profit margin is very low, and some 190 polyester taffeta are already losing money.”
Since this year, “high inventory and high production start-up” “It has become a new feature of the industry. Especially in June, the weaving inventory has been as high as 42 days, the highest value in recent years. This has led to many obstacles on the road to market recovery. “The current boom in the raw material market does not mean that the entire industrial chain is improving. The key depends on whether the demand can really rise and whether so much inventory in the market can be consumed.” said Mr. Shen, who has been working in the Wujiang textile industry for more than ten years. .
On the one hand, many textile bosses have positive expectations for July. On the other hand, they are also worried about how to digest the increasingly high inventory in their own factories. “This year we will not reduce the start of production easily, because as soon as the market starts, it is relatively easy to remove inventory.” Mr. Chen from Shengze District said.
There is a saying in the textile market, that is, five times will be poor, six will be perfect, and seven times will turn around. At present, the textile market has entered a more subtle range. , a short-term U-turn in the market does not indicate a change in the general direction. Whether it is the establishment of a staged bottom or the beginning of an abyss still needs substantial and positive promotion. Therefore, textile people still need to calmly treat this wave of market enthusiasm and do not blindly Operate optimistically.
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